Tvardi Therapeutics Inc (TVRD) 2014 Q2 法說會逐字稿

Good afternoon and welcome to Cara Therapeutics' second-quarter 2014 earnings conference call. (Operator Instructions) Please be advised that this call is being recorded at Cara's request.

I would now like to turn the call over to the Cara team. Please proceed.

Good afternoon. This is Jesse Baumgartner with Stern Investor Relations; and welcome to Cara Therapeutics' second-quarter 2014 conference call. The news release with our second-quarter financial results and corporate update became available at 4 o'clock today and can be found on our website at www.caratherapeutics.com. You may also listen to a live webcast and replay of today's call on the investors section of the website.

Before we begin, let me remind you that statements made on today's call regarding matters that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of these forward-looking statements include statements concerning the expected timing of the Company's clinical trials, statements concerning the potential results of planned clinical trials, and future development milestones for the Company's product candidates. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Risks are described more fully in Cara Therapeutics' filings with the Securities and Exchange Commission, including the Risk Factors section of the Company's annual report on Form 10-K for the year ended December 31, 2013, and its other documents subsequently filed with or furnished to the SEC.

All forward-looking statements made on today's call speak only as of the date on which they were made. Cara Therapeutics undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

Now let me turn the call over to Cara President and CEO, Dr. Derek Chalmers.

Okay. Thanks, Jesse. Good afternoon, everybody. Thanks for joining us on the call today.

We have continued to make rapid progress with our clinical development plans during the second quarter and early here in the third quarter, including a number of recent milestones that we think are very encouraging. So we are going to give you some color around those recent news items first; then we are going to update you on what we expect for the rest of 2014; and then we will go through our financials and move into a Q&A session after that.

So, we are pleased to announce a number of significant news items during the past few months around both our clinical progress and some important internal corporate developments, which will further support our late-stage development trials for our lead candidate, I.V. CR845, and indeed beyond.

On the management side, we are pleased to announce two important additions to the Cara team. The first was Robert Medve as Chief Medical Officer. Robert brings more than 20 years' experience in both successful drug development and clinical pain management, most recently as the CMO at Nektar Therapeutics. He has also held senior leadership positions at both J&J and also Knoll Pharmaceuticals.

And secondly, Eric Vandal as Vice President of Commercial Operations here at Cara. Eric is primarily responsible for implementing commercialization and marketing strategies in support of ongoing clinical development programs and, very importantly, laying the groundwork necessary to build a commercial infrastructure to support I.V. CR845's launch into the hospital space.

Eric brings two decades of experience in relation to marketing products into both the hospital market as well as the primary care acute and chronic pain markets. He has held previous senior positions at King Pharmaceuticals -- of course now Pfizer -- Alpharma, and Endo Pharmaceuticals.

Recently we also announced the addition of both Dr. Jeffrey Ives and Harrison Bains to our Board of Directors, replacing Ed Hurwitz and Dr. Charles Moller. We are very excited to bring both Jeffrey and Harrison here at an important time for the Company, and we would like to take this opportunity to thank both Ed and Charles for their significant years of service and support on the Board, indeed all the way through our recent IPO earlier this year.

Next, the clinical front. We continue to execute on our development plans for both the IV and the oral formulations of 845.

In July we announced the initiation of a human abuse liability trial of I.V. CR845 following specific protocol suggestions from both the FDA and the Controlled Substance Staff specifically at the FDA. We view this trial as a significant milestone in the development path for CR845, in that data from the study will provide the basis for any ultimate scheduling decisions made before drug approval.

In this regard, the Agency guidance towards use of a Schedule IV active comparator -- that was pentazocine -- as opposed to a Schedule II narcotic opioid such as morphine, is in our view an encouraging indication of current opinion of CR845's possible level of abuse liability.

As a quick reminder here, the DEA classifies drugs into five schedules according to both medical utility and abuse potential. For example, narcotics with a higher abuse potential like oxycodone and morphine are on Schedule II, while drugs with a lower abuse potential such as benzodiazepines are on Schedule IV.

As such, an ultimate scheduling of IV or lower for 845 would be clearly differentiating in a market space that is dominated by short-acting opioids in Schedule II. We anticipate top-line data, as we said previously, from this trial in Q4 of this year.

In June, we also announced that we had initiated a Phase 1 single-ascending and multiple-ascending dose trial of an oral tablet formulation of CR845. PK safety and biomarker data from this trial will inform appropriate dosing regimens to employ in PoC Phase 2 trials with this tablet formulation going forward.

We see very significant potential for Oral CR845 in both the acute pain space -- for example, as a step-down treatment for the postoperative patient at discharge -- and also within the chronic pain space in treating chronic pain conditions, where a peripherally-acting, potentially non-abusable analgesic could meet a large unmet need. Again, we expect top-line data from this trial in Q4 of this year.

In the context of unmet clinical need, we have previously guided that we aim to explore additional non-pain clinical indications for CR845, particularly focusing on the anti-itch or antipruritic properties of CR845. In this regard, we were very pleased to announce this week the dosing of the first patients in a PoC Phase 2 trial in uremic pruritus. This is an intractable type of itch in dialysis patients that is generally resistant to conventional treatments and diminishes quality of life for almost half of all kidney dialysis patients.

With no presently approved products in the US or the EU for this condition, CR845 may provide an important therapeutic approach for these particular patients. We expect top-line data from this study in the first half of 2015; and positive data from this trial may also be indicative of the potential for 845 as a general, novel antipruritic agent.

Our Japanese partner, Maruishi Pharmaceuticals, is focused on developing 845 as a novel treatment for both uremic pruritus and postop pain in the Japanese territory. And we recently announced the rapid progress that the Maruishi team had made in successfully completing its Phase 1 SAD and MAD studies of I.V. CR845 in a Japanese population, and the consequent achievement of a Phase 1 development milestone for Cara. We are pleased by Maruishi's commitment, and we look forward to reporting continued progress as we go forward with that relationship.

Looking ahead to milestones for the rest of 2014, in addition to reporting top-line data for the HAL and the oral tablet trials, we continue to work through CMC requirements for the I.V. CR845 ahead of requesting our end of Phase 2 meeting with the FDA in the second half of this year. This will allow synthesis of Phase 3 drug product and initiation of registration trials for CR845 in acute pain early in 2015 and maintain our timeline for NDA submission in 2016.

We remain in a very strong financial position from our IPO in February that raised $56.2 million in net proceeds for the Company, and we are certainly well capitalized to continue executing on the clinical development plan for 845 as we move forward here. So with that, I'm going to turn it over to Joe to take you through the financial details related to this quarter. Joe?

Thank you, Derek. We reported a net loss available to common stockholders of $3.6 million or $0.16 per basic and diluted share for the second quarter of 2014, compared to a net income available to stockholders of $1.5 million or $0.34 per basic share, and $5.3 million or $0.33 per diluted share for the same period last year.

The weighted average number of shares used in the share calculations increased to 22.6 million shares basic and diluted, from 4.3 million shares basic and 16 million shares diluted for the respective periods, due to common shares sold by the Company's IPO and the automatic conversion of convertible preferred shares into common shares in connection with the IPO during the first quarter of 2014.

License fee revenue was $0.3 million for the second quarter of 2014, relating to the achievement of the Maruishi milestone in June 2014, compared to $9.6 million of the upfront payment received from the execution of the license agreement with Maruishi in April 2013. Of the remaining $0.2 million of the milestone earned during the second quarter of 2014, $0.1 million was recognized as collaborative revenue and $0.1 million was deferred.

Collaborative revenue was $0.7 million for the second quarter of 2014, compared to $0.3 million in the same period of 2013. The collaborative revenue for the second quarter of 2014 and 2013 included $526,000 and $306,000, respectively, of revenue that had been deferred upon entry into the license agreement with Maruishi, and $132,000 and $30,000, respectively, from the sale of clinical compound.

R&D expenses were $3.2 million in the second quarter of 2014, compared to $2.0 million in the same period last year. The higher R&D expenses in the second quarter of 2014 were principally due to direct preclinical studies and clinical trial costs and consulting services in support of the preclinical studies and clinical trials. The increase in clinical trial costs resulted from the CR845 drug manufacturing costs, the Phase 1 Oral CR845 trial and tablet formulation costs, and the Phase 2 I.V. CR845 hemodialysis uremic pruritus trial preparation costs.

General and administrative costs were $1.5 million in the second quarter of 2014, compared to $1.0 million in the same period last year. The increase in the second quarter of 2014 was primarily due to increases in stock option expense, insurance costs, payroll and related costs, public investor relation costs, professional fees including director fees, and accounting and auditing fees, partially offset by a decrease in consultant costs, primarily related to the success fee associated with obtaining the Maruishi license agreement in 2013.

Interest income net was $56,000 of interest income in the second quarter of 2014, compared to a $1.6 million of interest expense in the second quarter of 2013. The decrease in interest expense was primarily due to the outstanding convertible promissory notes during 2013, which had generated interest expense.

At June 30, 2014, our cash and cash equivalents totaled $62.8 million, compared to $67.0 million at March 31, 2014, and $12.4 million at December 31, 2013.

Now let me turn it back over to the operator to start the Q&A session. Thank you all.

(Operator Instructions) Alan Carr, Needham.

Hi, thanks for taking my questions. Wonder actually if you could comment a bit more about the abuse liability trial. Before, you all had talked about I think three different doses of 845 versus morphine. And obviously, as you mentioned earlier, you have got a change in the comparator arm there.

So can you tell us about, I guess, the pluses and minuses of using that one instead of morphine? Is there any opportunity for maybe getting this drug not being scheduled? Thanks.

Yes, hi, Alan. Thanks for dialing in. I don't think there's any minuses to the guidance we got from the FDA. As you know, we have waited for this for a reasonable length of time now, and I have to say I was quite surprised that they actually thought fairly well about this in terms of coming back with proposed changes for the protocol.

So you are right. We initially proposed we were going to compare three doses of our drug; that would be a therapeutic dose and we -- based on the bunionectomy data; a super-therapeutic dose, which is generally guided as 3 times the therapeutic; and then a sub-therapeutic dose. The guidance from the Agency was for this particular molecule, of course, which is unlikely to have a U-shaped curve -- we have never seen it and it is not CNS active -- then a therapeutic dose and super-therapeutic dose is sufficient in their view. And we would agree with that.

The comparator issue is the most important by far. We previously assumed we would compare the drug to a standard narcotic opioid, morphine, which is commonly used in the hospital setting and of course is Schedule II. Morphine of course is an almost pure mu opioid, smaller than any of the other opioid receptors.

The Agency has recognized that our drug obviously doesn't have any mu activity, as a pure kappa. And they have also recognized that, based on the evidence we have so far I hope, both preclinically and clinically, that we have very little evidence of CNS responsiveness with the drug.

So they have endeavored to find a comparator that has kappa agonist activity as well as mu activity and, if you like, less abuse liability in relation to that pharmacology. And pentazocine really checks all the boxes in that regard.

Pentazocine does have some mu activity, has been recorded as euphorigenic in standard abuse liability trials, and is scheduled at level IV. So we think that is a better comparison for us, because it sets the baseline for the molecule at Schedule IV level, as opposed to Schedule II.

And if we see success in this trial -- and that success would be our molecule would not produce a drug-liking response that was comparable to pentazocine -- then that would be an argument that the drug should be scheduled at a lower scheduling level than pentazocine. That really only leaves Schedule V or nonscheduled in that regard.

In other words, it is a shorter distance to nonscheduled from a level IV than it is from a level II. So that is why we see this guidance as really a win in relation to this trial.

Okay. One other one. Timing for next steps for Maruishi -- or actually, what are the next steps and then the time for that, now that they have wrapped up Phase 1?

Yes, Japanese PMDA being the regulatory authority, as it likes to see safety data also within the patient population for a study, so their next phase is going to be Phase 1 in dialysis patients followed by a PoC study, actually a Phase 2 study in a larger population in the Japanese population.

I can't give you a specific timeline for that, Alan. I don't know that exactly at this point. But we anticipate that would be in the reasonable near future.

And of course, that engenders another milestone to Cara as they move into Phase 1 in dialysis patients.

Okay, great. Thanks very much.

Annabel Samimy, Stifel.

Hi, Derek, this is [Jeannie] on for Annabel. I had a few questions for you.

I know the end of Phase 2 with the FDA is coming up. Is that the only rate-limiting step before Phase 3 initiation?

It is in terms of -- and it is an important one, in terms of being able to initiate the Phase 3 trial. We simply have to get, as you know, drug product approved by the Agency that is suitable for registration trials.

At this point we have a couple of ongoing CMC requirements prior to synthesis with that Phase 3 material, both of which we really need for the end of phase 2 CMC meeting. The most important of those is the manufacturing process risk assessment study, that is required to your standard practice. As you know, that requires looking at every variable and every stage of the synthesis.

We have that ongoing, and it looks like the timeline for that would be -- we should complete that somewhere in Q4. So, obviously, we need that prior to submission. And then once we have an agreement from the Agency in relation to that and the spec analysis from two independent batches, then we can synthesize drug product.

The second crucial item that is ongoing is we have a tech transfer underway from our drug product manufacturer, which has to this point used a UK base, and they are moving it into Central Europe. So that requires a little bit of time. Again, it looks like that is going to complete in Q4 also.

So we need both of those pieces complete and finalized. And then we need agreement with the Agency, and that allows us to actually synthesize drug product.

Okay. A question about uremic pruritus. I know that in the past you talked about how it could go into a broad label. Are you also thinking about it in terms of oral form versus IV only?

Yes to both of these, actually. We are really using the IV formulation for ease of use at this point, simply because we were further along with IV. We had already established safety in a dialysis population with our IV formulation, so it is easier to file that IND and move into PoC work with the IV formulation.

But we do see this as an indicator of the possibility and potential of using 845 as a general anti-pruritic agent simply because we know, if you like, kappa's action in relation to anti-pruritic responses. It's is based on localization on the C-fibers that essentially mediate the itch response.

So there is good evidence already out there from older previous kappa agonists clinically indicating that they are anti-pruritic against a number of clinical situations and a number of different drug types. So we see no reason why 845 shouldn't have the same pharmacological response.

So yes, we think -- and indeed we filed the IND in this regard -- that there is a potential to move 845, particularly in the oral form, forward into other clinical conditions associated with chronic pruritus.

Let me just ask you this final question about the abuse profile. It looks promising. But in terms of pentazocine being a comparator, is it in some ways much more difficult because it is Schedule IV? Do you see any issues coming up because of that?

Yes, actually, that's a great question. When we look at the data already published in relation to pentazocine, and I am sure you could find this fairly readily in terms of abusability, the response to that particular molecule -- obviously at the appropriate dose -- is not too far off the euphorigenic

response you would see from a standard oxycodone-type response.

So that is one answer to the question. It certainly is euphorigenic.

The other answer, of course, which I think is what you are most concerned with is: Do we have a narrow window into which to see the signal? The answer to that is the protocol for this type of study always involves a drug discrimination test prior to actual measurements, so we establish that we are recruiting subjects who can discriminate a euphoric response with the particular active comparator. So we are fairly confident with that piece of the protocol in place that we will be using subjects who are sensitive to pentazocine-related euphoria.

Okay. I just want to confirm this. You guys are on track with proof of concept for your oral acute pain tablet, right?

Yes. In terms of the Phase 1 trial, we have already actually completed the single-ascending-dose cohorts, and we are very shortly about to move into multiple-ascending-dose studies. And we will have all that data hopefully to report to you somewhere around our next call.

Yes. Well that's all the questions I have. Thank you.

Great. Thanks for dialing in.

(Operator Instructions) Chiara Russo, Janney Montgomery Scott.

Great. Thanks for taking my call. I just have basically some quick housekeeping questions. Can we assume that levels for R&D and G&A will stay approximately the same going through to the second half of the year?

I think we are going to see some increases as far as R&D is concerned. G&A will probably stay about the same.

Okay. Your run rate is good. How far do you anticipate your cash taking you out at this point?

Right now we are looking certainly good through 18 months from now, and that is excluding any milestone payments that we do foresee getting. But without that, we still have runway to take us 18.

Okay, that was actually I think all I had. Everybody else asked my questions.

Okay, Chiara. Thanks for calling in.

No problem.

Thank you. I am showing no further questions at this time. I will now turn the call over to Dr. Derek Chalmers for closing remarks.

Thank you, everybody, for calling in, especially on a warm August day. And we look forward to reporting our progress again on a cold November day at some point in the future. So take care, everybody. Thank you.

Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you once again for your participation. You may now disconnect. Everyone have a great day.